Why Roc Nation Needed to Restructure

Jay Z, Jay Brown, and Desiree Perez have made sweeping changes at Roc Nation, but those changes were critical for the company’s future.

Back in December, I wrote Why Roc Nation May Move on From Its Record Label. Here’s a segment:

Roc Nation Records still has 24 artists signed to the label, but the sports division has nearly double that number. The music side of the house focuses more on artist management, most recently supporting Mariah Carey’s new album, but many of its managed acts are in the twilight years of their careers.

If trends continue, Roc Nation Records will be more symbolic than it is impactful. The label may soon become a mere vehicle for the 4:44 rapper to drop his own albums and an excuse to host bougie brunches before the Grammys. It’s an inevitable, but logical, outcome based on the management structure that Shawn Carter and Roc Nation CEO Jay Brown built. The business can still thrive regardless of changes in the music industry.

Soon after, changes started happening. In January, Phil McIntyre was out as president of Roc Nation Management. In March, Benny Pough, president of Roc Nation Records, was let go. In May, the company fired Azim Rashid (SVP Promotion), Orlando McGhee (SVP A&R), Gita Williams, (EVP Marketing), and Fairley McCaskill (Sr. Director Publicity).

I wasn’t surprised, but still, damn! Roc Nation cleaned house like a #1 seed that just got waxed in a second round playoff series.

Despite the changes, Roc Nation’s not moving on from its record label just yet. It’s turned a new leaf. Roc Nation’s Shari Bryant and Omar Grant have been named label co-presidents. The announcement came two days before Meek Mill and Jay Z’s announced the company’s new joint venture —Dream Chasers.

What a week. What a wild first half of 2019! As Roc Nation gears up for this next chapter, it will need to maintain alignment within each business unit and across the entire music side of the company.

Promote from within

Roc Nation’s recently-fired execs all had brief stints at the company. Benny Pough came and went in less than 18 months. Phil McIntyre was at the company for less than ten months. Azim Rashid was there just over a year. Same with Fairley McCaskill. That’s barely enough time to evaluate the results of any strategic moves.

For an entire cohort of execs to depart, it means one of two things happened: One, the initial wave of 2017 and 2018 executive hirings was a strategic mistake. The company’s power trio (COO Desiree Perez, CEO Jay Brown, and Jay Z) made these hires with a particular vision in mind but made a costly pivot away from that. Or two, there was an HR-related issue. (There were rumors that these firings were connected to Roc Nation’s lawsuit with Daniel Franco, the boxer who sued the company for injuries he sustained as a signed athlete, but I’ve yet to see anything conclusive on that front).

An HR-related issue may still be plausible, but the strategic misstep is much more likely. Most of these hires were high-ranking execs at other labels. Pough was an EVP at Epic Records. Rashid was an SVP at Capitol Records. Roc Nation likely wanted to match the experience and maturity of its roster with execs who have been around the block.

It’s an understandable move, but there were several drawbacks. First, firms often hire waves of seasoned execs to course-correct and implement a new strategy. If Roc Nation’s goal was to better serve today’s artists who are skeptical of label contracts and want to own their masters, that’s a tough ask to put on a group of execs who all came from traditional record labels.

Second, those execs were all top-heavy, external hires. Their presence can discourage Roc Nation’s homegrown employees who want to build their careers with the company. If leadership roles are only filled by outsiders, employees may build resentment toward those hires and the managers who brought them in. Companies need a healthy balance of internal promotions and external hires to maintain organizational health.

The elevation of Bryant and Grant sends a strong message. Bryant started her career as an intern back at Roc-a-Fella Records, while Grant had been with Roc Nation for nine years. Their hires echo a sentiment that’s close to Jay Z’s heart. At the Roc Nation-Dream Chasers press conference last week, Hov said “Got to clean the floors up before you own the building.” Throughout his career, Jay Z has brought his friends along the journey and put them in positions to blossom. Desiree Perez, Jay Brown, and Ty Ty have all worked with Jay Z for decades and are all in leadership positions at Roc Nation. That mentality is a large reason why rappers, athletes, and entertainers want to partner with Roc Nation. If that went away, Roc Nation would lose its edge.

The (co-) CEOs of the R-O-C?

The leadership change is exciting, but the decision to split the label’s presidency role is head-scratching. Companies normally justify co-CEOs and co-presidents with a clear delineation of responsibilities. Salesforce, Whole Foods, and Oracle have proudly embraced this model. But Roc Nation has not spoken on it yet.

The Billboard article about the co-presidents was pretty vague:

"The pair will be tasked with boosting the imprint's talent roster, while developing strategies for current signed artists."

To be fair, co-leadership structures are fairly common–even when the title doesn’t reflect it. The decision to team Grant and Bryant up might be a reflection of Roc Nation’s COO-CEO structure up top. Desiree Perez is the COO, Jay Brown is COO, and Jay Z is the founder. But they operate more like a ‘Big 3’ that collectively lead the company.

But even with a clear designation of roles and responsibilities, the lack of a clear lead can make decision-making difficult—especially for a company that is under drastic changes. It can also cause added stress. If one person’s slate of responsibilities has more influence on the company’s future, the “co” title might seem meaningless.

Segment the business units

Last year, Roc Nation launched Equity Distribution—an independent distribution service company. It’s not nearly as public as competing services but has made headlines by signing Jay Z’s old friend Jaz O, Ryan Leslie, and others. There’s now a great opportunity to define the scope for Roc Nation, Dream Chasers, and Equity Distribution respectively.

Roc Nation’s label should still focus on the smaller segment of popular, experienced artists who are later in their careers. Dream Chasers should serve up-and-coming artists who have the potential to pop. And Equity Distribution should focus on the vast number of indie acts who are just starting out, or those who want to avoid record label contracts altogether.

It’s an opportunity to segment the long-tail:

In my December article, I compared Roc Nation’s strategy to Amazon since both companies started with a core product—books and record label contracts, respectively—then expanded. But a much better comparison (and aspiration for Roc Nation) is Disney Studios.

Here’s a segment of what I wrote last week in my update on Meek Mill’s joint venture:

"Roc Nation’s signed artists are further along in their careers than most record labels. It makes strategic sense for Dream Chasers to focus on younger artists instead. That way, Roc Nation can focus on its core competency (established acts) and still have a vested interest in rising artists. It’s no different than Disney Studios managing both Fox Searchlight for art-house films and 20th Century Fox for its blockbusters."

Each of Disney’s film studios has a distinct brand of movies that they release. But most record labels don’t have that. Due to all major label mergers and acquisitions, it’s hard to differentiate a “Capitol Records rapper” from an “Interscope rapper.”

Roc Nation has an opportunity to improve upon that. It’s a lofty goal. But it’s attainable with the right discipline.

This article was discussed on the Trapital Podcast: Roc Nation's Wild Year